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A Chilean sailor returned four million pesos (7,600 dollars) in cash he found inside an open safe amid the rubble of a house destroyed by last month’s devastating quake and tsunami, local media reported Friday.

“I gathered everything I could and put it back inside,” Corporal Carlos Gomez of the Almirante Latorre frigate told La Segunda newspaper.

“While I was doing this, I thought the owner might need (the cash), so I called the officer in charge and we contacted the police,” he added.

Gomez found the safe full of money, mud and water while scouring the sparsely populated Juan Fernandez Islands, which were destroyed by the February 27 disaster.

His unit was the first to reach the archipelago after the quake and tsunami, with orders to clear the affected areas.

The government has lowered the official death toll from the massive 8.8-magnitude quake and tsunami to 452, from an earlier high of 802.

Officials said another 96 people were still missing or unaccounted for.

Two million people were affected and 800,000 were left homeless, mainly in hard-hit central and southern coastal areas.

THE NATION Chile’s Socialist Rebar by Naomi Klein

March 3, 2010

Ever since deregulation caused a worldwide economic meltdown in September 2008 and everyone became a Keynesian again, it hasn’t been easy to be a fanatical fan of the late economist Milton Friedman. So widely discredited is his brand of free-market fundamentalism that his followers have become increasingly desperate to claim ideological victories, however far-fetched.

The G-8 powers are willing to do just about anything to get a deal in Copenhagen. But the urgency doesn’t come from a desire to stop climate change.

A particularly distasteful case in point. Just two days after Chile was struck by a devastating earthquake, Wall Street Journal columnist Bret Stephens informed his readers that Milton Friedman’s “spirit was surely hovering protectively over Chile” because, “thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse…. It’s not by chance that Chileans were living in houses of brick–and Haitians in houses of straw–when the wolf arrived to try to blow them down.”

According to Stephens, the radical free-market policies prescribed to Chilean dictator Augusto Pinochet by Milton Friedman and his infamous “Chicago Boys” are the reason Chile is a prosperous nation with “some of the world’s strictest building codes.”

There is one rather large problem with this theory: Chile’s modern seismic building code, drafted to resist earthquakes, was adopted in 1972. That year is enormously significant because it was one year before Pinochet seized power in a bloody U.S-backed coup. That means that if one person deserves credit for the law, it is not Friedman, or Pinochet, but Salvador Allende, Chile’s democratically elected socialist President. (In truth many Chileans deserve credit, since the laws were a response to a history of quakes, and the first law was adopted in the 1930s).

It does seem significant, however, that the law was enacted even in the midst of a crippling economic embargo (“make the economy scream” Richard Nixon famously growled after Allende won the 1970 elections). The code was later updated in the nineties, well after Pinochet and the Chicago Boys were finally out of power and democracy was restored. Little wonder: As Paul Krugman points out, Friedman was ambivalent about building codes, seeing them as yet another infringement on capitalist freedom.

As for the argument that Friedmanite policies are the reason Chileans live in “houses of brick” instead of “straw,” it’s clear that Stephens knows nothing of pre-coup Chile. The Chile of the 1960s had the best health and education systems on the continent, as well as a vibrant industrial sector and rapidly expanding middle class. Chileans believed in their state, which is why they elected Allende to take the project even further.

After the coup and the death of Allende, Pinochet and his Chicago Boys did their best to dismantle Chile’s public sphere, auctioning off state enterprises and slashing financial and trade regulations. Enormous wealth was created in this period but at a terrible cost: by the early eighties, Pinochet’s Friedman-prescribed policies had caused rapid de-industrialization, a ten-fold increase in unemployment and an explosion of distinctly unstable shantytowns. They also led to a crisis of corruption and debt so severe that, in 1982, Pinochet was forced to fire his key Chicago Boy advisors and nationalize several of the large deregulated financial institutions. (Sound familiar?)

Fortunately, the Chicago Boys did not manage to undo everything Allende accomplished. The national copper company, Codelco, remained in state hands, pumping wealth into public coffers and preventing the Chicago Boys from tanking Chile’s economy completely. They also never got around to trashing Allende’s tough building code, an ideological oversight for which we should all be grateful.

Thanks to CEPR for tracking down the origins of Chile’s building code.

The effort to rebuild Chile after Saturday’s massive earthquake can take at least three years, Michelle Bachelet, the country’s outgoing president, has said.

Bachelet appealed on Thursday for international aid to help in the reconstruction effort following the quake and tsunami which destroyed infrastructure and killed more than 800 people in central Chile.﻿

“There are rural areas where everything has tumbled to the ground… infrastructure has been destroyed,” Bachelet told ﻿﻿Santiago’s ADN radio.

“There are rural areas where everything has tumbled to the ground… infrastructure has been destroyed,” Bachelet told ﻿﻿Santiago’s ADN radio.

“I think it will take up almost all of the next government’s mandate, or at least the next three years” to rebuild, she said, a week before Sebastian Pinera, the country’s president-elect, takes over.

Bachelet said Chile will have to ask the World Bank and other organisations for credit to help absorb the cost of the reconstruction effort.

‘Completely uninhabitable’

Al Jazeera’s Teresa Bo, reporting from the hard-hit city of Constitucion on Thursday, said some areas of Chile have been declared completely uninhabitable.

“Lots of people will have to be moved and this is probably going to be a very costly reconstruction for this country,” she said.

“Key sectors of the Chilean economy have been affected, for example the wine proucing regions. But Chile has a fund that was created by its copper exports, so they have some money saved that they will probably use for this reconstruction.

“However, we do know that they will probably borrow money from international organisations.”

No damage or injuries were reported in the aftershocks that came as Bachelet called for calm and asked people to stop hoarding supplies and help with relief efforts.

Bachelet’s statement came in the face of criticism that her government has been slow to respond to one of the world’s most powerful earthquakes in a century.

Chilean emergency officials and the military have blamed each other for not clearly warning coastal villages of tsunamis immediately after Saturday’s quake, angering survivors who lost relatives and friends in the massive waves.

The number of those killed by Saturday’s magnitude 8.8 earthquake and the tsunami that followed is likely to increase as rescue workers continue search and recovery efforts amid the rubble of collapsed buildings.